Trade Negotiations with Japan
Mr Peterson  conveyed the substance of a formal note from the U.S. State Department in the following terms- 'Tokyo's reports indicate that in return for de facto m.f.n. for Japan, Australia would request Japanese make commitment by specified tonnage Australian wheat annually for indefinite period.
Such arrangement would be open objection since it would require Japanese to ignore commercial considerations for purchase specified quantity, thus denying U.S. and other countries opportunity competing on equal basis in Japanese market. We cannot object if Japan awarded wheat contracts on competitive bids thus giving U.S. equal opportunity with other suppliers. Canberra's reports indicate Australian aim may be limited to assurance m.f.n.
treatment in Japanese wheat market rather than firm purchase commitment.'
Mr Crawford replied to Mr Peterson's message in the following terms:-
(i) We had asked the Japanese for m.f.n. treatment.
(ii) In view of the Japanese trading system we saw no way of Japan giving us m.f.n. treatment other than by some quota arrangement.
(iii) We would of course consider any proposition along the lines of the above note but he expressed two grounds for doubt- (a) whether the U.S. would in fact stand aside and allow fair competition in the Japanese wheat market; and (b) whether we could yet trust the Japanese Government to operate its wheat purchase programme on a fair basis.
(iv) He assured the U.S. that our wheat arrangement with the U.K.
was predicated on French and U.S. subsidies. In the absence of subsidised wheat imports, the ground for any special treatment would be removed.
Mr Crawford did not advise the U.S. authorities of the size of the wheat quota that we are seeking in the Japanese market, but he did make it plain that we were not attempting to reserve the Japanese wheat market for ourselves in the way that they had done. He also pointed out that Canada had found it necessary to have an assurance on wheat from Japan to ensure that they had a reasonable access to the Japanese market. He also reminded Mr Peterson that the U.S.' own policies were not exactly consistent. It was not really pleasing to have precepts handed to us by a nation so prone to observe them in the breach-India, Indonesia, Brazil, Section 22  and so on.
In conclusion there was a brief discussion on the scope for wool tariff negotiations and the possibility of some direct approach to the U.S. wool industry.